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Fighting for Control

John Williams, who founded Post Properties 32 years ago, has separation issues. He tried to step back from the Atlanta-based apartment REIT last summer, when he passed the chief executive position to Post President Dave Stockert. At the time, Williams said he felt like a mother whose daughter just got married and moved away. He also said Stockert was his “perfect successor.”

Now, Williams wants his baby back. On April 7, he launched a proxy battle with Post with the hope of getting a bloc of new directors elected that would form a majority on the company's 11-member board. Under his plan, Williams would replace Stockert as CEO and president, and former Equitable Real Estate Investment Management CEO and Chairman George Puskar would replace Bob Goddard as chairman.

Williams, who is Post's largest shareholder with nearly 2.9 million shares, or 7.3% of the company's outstanding stock, says he had no choice but to act after the board ignored his suggestions to right what he believes to be a sinking ship. “I believe the accelerating deterioration of the company's performance shows the current board's and management's inability to effectively address the serious business issues facing the company,” he says.

The company fired back April 16 in a press release blaming Williams for setting the stage for Post's poor performance of late. “Mr. Williams' recent legacy at Post is one of overly rapid geographic expansion into unfamiliar markets, substantial cost overruns and missed schedules on new developments with lease-up rates below projections,” according to the company.

Post stock closed at $43.56 on Oct. 1, 2000, the day before Williams warned Wall Street that he saw a real estate recession on the horizon. It has lost more than 40% of its value since then, closing April 22 at $26.24.

The succession-gone-wrong at Post should serve as a cautionary tale to other companies dealing with changes at the top, REIT analysts say. The lesson: The outgoing CEO must accept the idea that he no longer will be in charge.

When Williams gave up the CEO position in July, he retained the chairman's title as well as an office in Post Riverside, home of the REIT's headquarters. At the time, Williams said he would give Stockert room to establish himself as Post's leader as long as he heeded Williams' guidance.

But now Williams blames much of Post's poor performance on tactical errors by Stockert. Williams says that Stockert and the board have little control over Post's disposition program, and the firm is selling the wrong properties at “cut-rate” prices, Williams says.

Post hasn't let Stockert respond publicly. In February, Post's board stripped Williams of the chairmanship, but kept him as a director. A month later, Williams sued the company to keep it from terminating him and from limiting his access to company information. Williams dropped the lawsuit April 7, the same day he launched his proxy fight to win back control of the company. The battle will be settled May 22, when the results are released at Post's annual meeting.